Obamacare: Unaffordable for Many

A month ago Senator Max Baucus, a Democrat from Montana, projected that he envisioned the implementation of the President’s new health care program, aka Obamacare, as being “a train wreck.”

Well, in reviewing a report released yesterday by the US House of Representatives Committee on Energy and Commerce, we gain a greater appreciation for just how expensive this train wreck might be.

I hope readers are not already feeling ill at ease this morning because after reading this report I can assure you that you will get sick. Let’s navigate and look more deeply at The Looming Premium Rate Shock:

Affordability. It was a central premise – and promise – of the Patient Protection and Affordable Care Act (PPACA) when the law was debated in Congress throughout 2009 and signed into law on March 23, 2010. In his remarks that day, President Barack Obama stated: “This legislation will also lower costs for families and businesses . . . .” Over three years later, the White House continues to state that the PPACA will lower costs.

Then how do the wizards working at 1600 Pennsylvania Avenue explain this.

On March 14, 2013 the committee sent letters to 17 of the nation’s largest health insurance companies requesting analyses of the effect of PPACA’s (i.e. Obamacare) policies, mandates, taxes, and fees on premiums.

The materials submitted by the health insurance companies show that the PPACA will increase premiums significantly for most Americans. One company stated: “…consumers in about 90% of all states would likely face significant premium increases.” Another insurer wrote that they “expect significant increases in premiums for a large percentage of our membership depending on their current health plan product and their specific circumstances.”

How large might the increases be for those purchasing individual coverage?  (caution: get your barf bag ready!!)

The total average change due to the PPACA for new business in the individual market will be a 96 percent increase in premiums. Existing customers can expect an average increase of 73 percent.

Note that these are only the average expected changes because of the PPACA. As is shown above, new business in the individual market could see a premium increase of 413 percent when new requirements on age rating and required benefits are taken into account.

In dollars, this is a large hit to every American’s pocketbook. The average yearly cost for a new customer in the individual market grows from $1,896 to $3,708 — a $1,812 cost increase.

Another insurer provided materials showing that the average increase would be much higher for a young, healthy male. As the chart suggests, the PPACA could lead to a 180 percent premium increase.

What about for small employers, those being companies with fewer than 50 employees?

 . . .  purchasers of small group plans can expect premium increases of up to 50 percent. The insurer that produced this chart estimated that a plurality, 35 percent of  the small group market, can expect premium increases over 30 percent. An additional percent of small group purchasers can expect increases ranging from 20 percent to 30 percent.

And for large employers?

Most of the insurers contacted by the committee had not conducted an analysis on the PPACA’s effects on the large group market. One insurer that did, however, estimated a premium increase for the large group market at 20 percent to 25 percent. Another insurer provided the following chart showing estimated premium increases in the large group market ranging from 15 percent to 20 percent.

As if these increases were not enough to make you sick, the committee also informs us that new taxes and fees,

. . . could increase premiums from 2.3 percent to 2.5 percent in 2014 in the individual, small, and large group markets. This tax could increase premiums an additional 3 percent to 4 percent in future years. Other insurers, by grouping the fees and taxes together, found premium increases ranging from 4 percent to 8 percent.

What does the committee conclude?

The internal documents provided by the insurance industry confirm many of the concerns voiced over PPACA: despite promises that the law will lower costs, the PPACA will in fact cause the premiums of many Americans to spike substantially.

The broken promises are numerous, and the data reveals that many Americans, from recent college graduates to older adults, will not be able to afford the law’s higher costs.

One of the nation’s leading insurance companies that insures millions of Americans predicts premiums will nearly double for individuals getting a new plan, those keeping their insurance will see an average increase of 73 percent, and some individuals could see increases of as much as 413 percent.

These figures forecast looming financial hardships when the law takes effect on January 1, 2014.

Why is it that our economy cannot seem to gain any momentum? A variety of reasons but the grinding of the brakes related to Obamacare should not be underestimated.

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

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